Cycle Trading

Stocks broke lower on Tuesday shifting the odds towards a left translated daily cycle formation.

Tuesday was day 16 for the daily equity cycle. Had stocks broke higher on Tuesday that would have allowed us to construct the daily cycle trend line. Instead, stocks broke lower to close back in the volatility zone. Stocks also lost the 10 day MA and closed below the lower daily cycle band. Closing below the lower daily cycle band continues the daily downtrend. It also signals that the intermediate cycle is in decline. A left translated daily cycle formation will assure us of a left translated weekly cycle formation. And a left translated weekly cycle formation impacts our yearly cycle framework, which I will discuss in this week’s Weekend Report.